InvestingSuccess

I knew something was coming. The Astrology of Jupiter & Saturn told me so. But, I had no way of knowing it would be this….

In the Introductory remarks in my 2020 Financial Astrology Almanac ,I pointed out that 2020 would be the end of the current 20 year Gann Master Cycle and the beginning of a new cycle. I cautioned that 2020 would be a critical year for financial astrology. I hinted that 2020 could well mark the end of financial astrology as a tool if markets continued to power irrationally higher nurtured by a steady diet of low interest rate liquidity being injected into the system. What I did not know and could not know is that two Black Swan events would swamp the global economy starting in February 2020 – a crushing oil price war and the spread of a virulent flu strain that stands to re-shape leisure activity, social activity and indeed life as we know it. What we are all experiencing right now is the power of fear. Financial markets are a forward looking, discounting mechanism dominated by two emotions – fear and greed. When one of these emotions decidedly disappears completely and the other comes to dominate entirely, financial astrology as a tool breaks down.

How did we get to this position of fear?

I think what precipitated the entire calamity across markets was a breakdown of trust in the credit markets. I believe this breakdown may have started already in September 2019 when the overnight lending rate momentarily spiked, causing the Federal Reserve to start injecting massive liquidity into the banking system. The average investor scarcely took notice as all appeared well in the economy and across markets (at least according to Bloomberg, CNBC and others). It would appear that credit market matters did not improve, despite the liquidity injections. During October, November and December the amount of money injected into the system was staggering. In fact the injections were being dubbed ‘not-QE4’. Finally in February 2020 the strain on the credit system was too much and selling began in earnest by parties seeking to raise cash and reduce margin leverage. What should have been a 10-15% correction then suddenly spiraled out of control in Black Swan-like fashion. The Saudis and Russians could not agree on Oil output levels and a price war erupted, driving WTO Crude sharply lower. The spill-over effect drove equity markets lower, triggering more margin woes for over-leveraged players. Then the corona virus arrived on North American shores. Next thing you know, outright fear took over and a market selling frenzy resulted. Fear was now feeding on fear and investors were fleeing the markets.

There is only one cure for fear and that antidote is called optimism.

I remain optimistic that common sense will return to the situation real soon. I remain optimistic that this virus, like so many other virus organisms before it, will fade away as the weather changes now that Spring is here. In coming issues of the Astrology Letter, I will offer you some opinions on some large cap stocks that I feel have been overly beaten down. As the economy claws its way back to normalcy, these larger cap issues will hopefully lead the way. I will also offer some reviews of key financial astrology concepts so that as things return to some semblance of normal, your astrology skills remain robust. I remain optimistic that financial astrology will resume its place as a powerful tool for analysing markets.

Be well. stay safe.